Corporate Factbook

23 September 2020 Table of contents

Vattenfall Group - Overview and strategy 3 - Green Financing 20 - Sustainability deep-dives 28

Operating segments - Customers and Solutions 39 - Power Generation 44 - Wind 51 - Heat 61 - Distribution 67

Financials - Financial performance 73 - Hedging, debt and funding 77

2 Overview and strategy This is Vattenfall Activities in the Value Chain Active Inactive Upstream Production Transmission Distribution Trading Retail Services

Main markets CO2 emissions & Renewable In Brief 6.9 Million • Sweden capacity Electricity Customers • Vattenfall is a leading European • Germany 90 3 500 energy company • Netherlands 3 000 1.9 Million 60 2 500 • We want to make fossil-free living Heat Customers • Denmark 2 000 MW • United Kingdom 1 500 possible within one generation 30 3.3 Million Mtonnes 1 000 • We are driving the transition to a more Electricity 500 sustainable energy system through growth Network Customers 0 0 in renewable production and climate smart energy solutions for our customers 2.5 Million Gas Customers Installed renewable capacity (MW) • 100 per cent owned by the Swedish CO2 emissions (Mtonnes) State 19,814 Employees Electricity generation EBITDA breakdown by • Our long-term credit ratings are BBB+ breakdown by technology, 2019 segment, 2019 stable outlook by S&P and A3 negative Customers & Solutions Distribution outlook by Moody’s 7% 8% 21%

24% 41% SEK 130.3 35% 13% 42.4 bn TWh Heat

Power Generation 27% 24% Wind

4 Vattenfall Executive Group Management

President and CEO Magnus Hall1

Senior Vice President, General Senior Vice President, CFO Counsel and Secretary to the Anna Borg2 board of Directors Anne Gynnerstedt

Senior Vice President, Senior Vice President, Human Strategic Development Resources Andreas Regnell Kerstin Ahlfont

Senior Vice President, Communications Karin Lepasoon3

Business Area Business Area Business Area Business Area Business Area Heat Customers & Solutions Wind Power Generation Distribution6

Senior Senior Executive Senior Vice Senior Vice Executive Vice Senior Vice Vice President, President, Senior Vice President President President Generation Markets President Gunnar Tuomo Martijn Hagens Torbjörn Anna-Karin Annika Viklund Groebler Hatakka4 Wahlborg Stenberg5

1 Magnus Hall will leave Vattenfall, at latest in January 2021. 6 2 Anna Borg will take over as CEO on 1 November 2020. The electricity distribution operations are regulated by the Swedish Electricity Act 3 Karin Lepasoon will leave Vattenfall at the end of September 2020. (Ellagen) and the German Energy Industry Act (Energiewirtschaftsgesetz), and are 5 4 Tuomo Hatakka will retire at the end of 2020. unbundled from Vattenfall’s other operations. 5 Acting SVP. For more info: please see page 84-85 in the Annual- and Sustainability Report 2019 Vattenfall Board of Directors

Chairman of the Board Lars G. Nordström

Board member Board member Viktoria Bergman Ann Carlsson

Board member Board member Håkan Erixon Mats Granryd

Board member Board member Tomas Kåberger Jenny Lahrin

Board member Board member Åsa Söderström Fredrik Rystedt Winberg

Employee Employee Employee Employee Employee Employee representative representative representative representative representative representative (deputy) (deputy) (deputy) Robert Lönnqvist Rolf Ohlsson Jeanette Regin Lennart Bengtsson Anders Bohlin Christer Gustafsson

For more info: please see page 82-83 in the Annual- and Sustainability Report 2019 6 Vattenfall’s value chain

Production Electricity distribution Sales of electricity, District heating Energy services & heat and gas decentralised generation Production from • Guarantees secure • Sells electricity, heat • Drives the Offers energy services • Hydro supply via well- and gas to consumers transformation towards • Heat pumps • Nuclear functioning distribution and business fossil-free heating and • Solar panels networks and smart customers cooling solutions • Coal • Charging solutions for network solutions • Focuses on various together with partners, • Natural gas electric vehicles • Enables customers to price and service cities and regions • Battery storage • Wind feed self-generated models, and gives • One of Europe’s • Solar electricity into the grid customers the largest producers and • Network services • Biomass (“prosumers”) opportunity to distributors of district • Smart meters • Waste • Flexibility services to understand and reduce heating Provides marketplaces Actively phasing out both electricity their environmental and access to fossil-based production producers and impact marketplaces where consumers to optimise customers can buy and network functionality sell electricity 7 Operating segment overview FY 2019

Operating segments Customers & Solutions Power generation We report our operations broken down by the Responsible for sales of electricity, gas and Responsible for Vattenfall’s hydro and nuclear Group’s operating segments: Customers & energy services in all of Vattenfall’s markets power operations, maintenance services Solutions, Power Generation, Wind, Heat, and • One of the market leaders in Sweden with nearly business, and optimisation and trading Distribution. The operating segments reflect our 900,000 electricity contracts operations, including certain large business Business Area organisational structure except for • One of the market leaders in the Netherlands with customers the Power Generation segment, which is divided 3.6 million electricity and gas contracts • Operates a portfolio with 7.2 GW nuclear capacity into the Generation and Markets Business Areas • Leading position in Berlin and Hamburg as an and 11.7 GW hydro power capacity across electricity supplier Sweden, Finland and Germany • Activities in France expanded from business • One of Europe’s largest providers of fossil-free Number of Employees as of 31 customers to also serve retail customers with electricity, with 35.8 TWh from hydro power and December 20191 electricity and gas 53.4 TWh from nuclear power • Operates 14,900 e-mobility charging points in • Provides professional asset optimisation services Sweden, Germany and the Netherlands and market access, and a leading player in PPA Customers and Solutions 3,150 • Launch of Flexpower, a public smart charging markets in northwest Europe network for e-vehicles, in cooperation with the • Closure of Ringhals reactor 2 and preparation for Power Generation 7,429 city of Amsterdam the decommissioning of Ringhals reactor 1 in 2020 Wind 1,000 Underlying Operating Profit3: SEK 1,337 mn Underlying Operating Profit: SEK 15,437 mn Heat 3,310 (5% of total) (58% of total) External Net Sales: SEK 87,343 mn External Net Sales: SEK 38,425 mn Distribution 2,247 (53% of total) (23% of total) EBITDA: SEK 2,976 mn EBITDA: SEK 13,642 mn (8% of total) (35% of total) Other2 2,678

1 Full-time equivalents. 2 Pertains mainly to Staff Functions and Shared Service Centres. 8 3 Numbers reflect FY 2019 Operating segment overview FY 2019 (Cont’d)

Wind Heat Distribution Responsible for development and operation of Responsible for Vattenfall’s heat operations Responsible for Vattenfall’s electricity Vattenfall’s wind farms as well as large-scale including sales, decentralised solutions and distribution operations in Sweden, Germany and decentralised solar power and batteries gas-and coal-fired condensing (Berlin) and the UK • One of the largest producers of offshore wind • One of Europe’s leading producers and • Leading owner and operator of electricity power in the world distributors of heat with more than 1.9 million end distribution networks in Sweden • One of the largest producers of onshore wind customers • Approximately 3.3 million business and retail power in Denmark and the Netherlands • Power-to-Heat facility connected to district customers in Sweden and Berlin, Germany • Inauguration of the Horns Rev 3 offshore wind heating network in Berlin, enabling the closure of • Swedish Energy Markets Inspectorate farm (407 MW) in Denmark a coal-fired power plant announced significantly lower revenue frames for • Winning bid for the subsidy-free Hollandse Kust • Feasibility study conducted by Vattenfall and the the next regulatory period, reducing the scope for Zuid 3 & 4 offshore wind farm (~750 MW) in the City of Berlin shows that a coal phase-out in needed investments Netherlands Berlin is feasible by 2030 • Major disruptions after Storm Alfrida in 2019 with • Construction started on the Kriegers Flak (605 • Transfer of district heating operations in Hamburg associated costs of approximately SEK 800 MW) offshore wind farm in Denmark completed million • Closure of the Hemweg 8 coal-fired power plant in the Netherlands • Switch from peat to wood pellets as fuel in heat- only boiler in Uppsala Underlying Operating Profit1: SEK 4,155 mn Underlying Operating Profit: SEK 550 mn Underlying Operating Profit: SEK 4,998 mn (16% of total) (2% of total) (19% of total) External Net Sales: SEK 6,578 mn External Net Sales: SEK 15,947 mn External Net Sales: SEK 17,903 mn (4% of total) (10% of total) (11% of total) EBITDA: SEK 9,645 mn EBITDA: SEK 4,957 mn EBITDA: SEK 8,236 mn (24% of total) (13% of total) (21% of total)

1 Numbers reflect FY 2019 9 Our beliefs about the future

1 2 3 4 5 6

Sustainability is Simple solutions Demand for Digitalisation of New Cost efficiency the business to customers fossil-free the entire energy competencies and needed in a electricity and value chain is are critical in the competitiveness complex energy grids will necessary energy transition is paramount landscape increase significantly

10 A strategy based on an “integrated utility logic” To enable our goal of fossil-free living within one generation

We believe being active in the whole value chain is strategically important:

It increases our competitive advantage in eg. wind auctions, by enabling stable revenues through Corporate PPAs with our customers

Access to renewable volumes on the customer side differentiates us from competitors as fossil-free electricity becomes more scarce

The ability to optimise dispatch across both customer loads and supply brings optimal value of a total portfolio

Diversifying and reducing total portfolio risk means lower cost of capital and an ability to take on more debt

11 Our milestones towards fossil-free living within one generation

2020 2023 2025 2030 2035

Fossil-free energy We provide electric We generate fossil-free Coal is phased out We are not done, solutions available charging for half a energy to power 30 from all our heat more to come… for all our customers million cars million homes operations

Our operations in 10 GW of third-party We pilot 100 MW of Our emissions are the Netherlands are renewables capacity green hydrogen gas reduced by 40%, in coal-free under management production from fossil- line with required level free electricity to limit global warming 600 MW additional, to below 2˚C flexible hydro The Nordic production capacity enables fleet is free from fossil more renewable fuels generation

12 Strategic targets Outcome of our strategic targets in 2019

Strategic focus area Strategic targets to 2020 FY 2019 Comments Driving decarbonisation with our Customer engagement, Net Promoter Improved performance by customers & partners Score relative (relative customer +1 Vattenfall and peers satisfaction): +2 Commissioning of Horns Rev 3 Securing a fossil-free energy supply Commissioned new renewables 1 226 MW (407 MW) and Slufterdam (29 capacity 2016-2020: ≥2,300 MW MW)

Absolute CO emissions, pro rata: ≤21 19.31 2 Lower coal-fired generation Mtonnes Mtonnes

Higher gross margin in Power Return On Capital Employed (ROCE): Delivering high-performing operations 8.5% Generation and capital gain ≥8% (Hamburg)

Empowering our people Lost Time Injury Frequency (LTIF): Unsatisfactory level, major 2.1 ≤1.25 ongoing efforts

Employee Engagement Index: ≥70% 69% Strong improvement

1 Including the heat operations in Hamburg, which have been sold and where emissions 13 amounted to 1.1 Mtonnes during the period January-September. Financial targets

Targets over a business Financial targets cycle1 FY 2019 FY 2018 Comment

Return on capital employed was 8.5% (7.0%). A higher gross margin in the Power Generation Return on capital employed: Profitability 8.5% 7.0% segment and the capital gain from the divestment of ≥8%2,3 the district heating operations in Hamburg made a positive contribution.

FFO/adjusted net debt increased compared FFO/adjusted with 2018, to 26.5% (20.7%). The increase is Capital structure net debt: 26.5% 20.7% mainly attributable to higher EBITDA as a result 22%–27%2 of higher achieved prices in Power Generation operating segment and lower paid tax.

At the end of Q1’2020, the Board of Directors Dividend: proposed a revision of the previously proposed Dividend policy 40%–70% of the year’s profit SEK 3.6 bn SEK 2 bn dividend for 2019 from SEK 7.2 to SEK 3.6 bn due to after tax uncertain market conditions, which was also approved at the Annual General Meeting.

1 5–7 years 2 Rolling 12-month values 14 3 The key ratio is based on average capital employed Investment plan 2020-2021

Total capex Growth capex per technology Growth capex per country 2020-2021 2020-2021 2020-2021

3%

9% 16% 8%

8% 11% 37% 58bn 35bn 35bn 11% 12% 23% SEK SEK SEK 61% 70%

31%

Growth, 35bn SEK Wind power, 25bn SEK Netherlands, 13bn SEK Maintenance, 13bn SEK Heat grids, 4bn SEK Denmark, 11bn SEK Replacement, 9bn SEK Distribution grids, 3bn SEK Sweden, 4bn SEK New businesses1, 3bn SEK UK, 4bn SEK Solar energy & batteries, 1bn SEK Germany, 3bn SEK

1 Mainly decentralised solutions, energy storage and e-mobility 15 Significant shift in production portfolio over the past 5 years The shift has accelerated with large investments in renewables and phase out of fossil production

CAPEX by technology Electricity production mix CO2 emissions SEK 30.8 bn SEK 36.4 bn 173.0 TWh 130.3 TWh 8.4% 83.8 24.0% 39.6% 48.7% 7.3% 69.2% 27.5% 30.5% 3.3% 22.7% 19.3 10.4% 5.8% 41.2% 19.5% 16.6% 25.3% 2015-16 2020-21 2015 2019 2015 3 20194 1 2 1 2 Other Hydro Wind Fossil Other Hydro Wind Fossil CO2CO2 emissions ((Mtonnes)Mtonnes)

Major investments in renewable projects Share of fossil production has been reduced …and with this our CO2 emissions • Around SEK 25 billion of investments are planned dramatically We sold the lignite business in 2016, which reduced

for new wind farms, both onshore and offshore • Strong wind growth: 3.4 GW installed capacity; our CO2 footprint dramatically • Recent milestones: > 3 GW under construction and >4 GW in • We continue to identify further actions such as • Winning bid for the world’s first subsidy-free development retiring coal fired power plants earlier than offshore wind farm once commissioned in • First large scale solar farm commissioned in planned (such as Hemweg-8 in the Netherlands) 2023 (Hollandse Kust Zuid 1-4) 2016, Parc Cynog (5 MW) • Major onshore projects in the Nordics and the • We are also phasing out coal from all of our heat • Increased focus on decentralised production, operations by 2030, at latest Netherlands (Blakliden & Fäbodberget, storage and EV charging Wieringermeer) • In 2030, the Nordic production fleet will be free • Coal-fired production has been phased out such • Proof of concept in solar & batteries ready for from fossil fuels as Reuter C in Berlin and Hemweg-8 in the scaling up and innovative solutions such as co-location with wind farms (Haringvliet, Netherlands Battery at Pen y Cymoedd)

1 Other includes nuclear, solar & batteries (CAPEX only) & biomass 4 Pro rata values, corresponding to Vattenfall’s share of ownership Including the heat operations in 2 Includes hard coal and gas Hamburg, which have been sold and where emissions amounted to 1.1 Mtonnes during the period 3 Consolidated values for 2015. Consolidated emissions are approximately 0.5% higher than pro rata January-September 16 emissions, corresponding to Vattenfall’s share of ownership Vattenfall tackles CO2 emissions throughout the value chain

CO2 – emissions 2019

Suppliers Own business Customers1 ~ 5 Mt ~ 19 Mt ~ 15 Mt

• Transparency on climate footprint • Climate neutral in the Nordic region • Products and services with clear 2030 climate footprint (EPD3 / LCA4) • Collaboration for phasing out fossil fuels • Coal phased out 2030 in the heat • Renewable decentralised solutions portfolio • Low carbon district heating • Fossil-free within one generation • Climate targets together with cities • Travels (EV100, EV2 policy, climate • E-mobility compensate) • Electrification of industries

1 Primarily related to natural gas consumption; 2 EV – Electric Vehicle; 3 EPD – Environmental Product Declaration – a third-party environmental declaration in accordance 17 with ISO 14025; 4 LCA – Life Cycle Assessment Credit ratings overview

Long term rating: A3 Long term rating: BBB+ Short term rating: P-2 Short term rating: A-2 Outlook: Negative Outlook: Stable Latest publication: 04 June 2020 Latest publication: 12 May 2020

• “Strategic role in Sweden, as well as "moderate" default dependence” • “Above 45% of EBITDA stems from relatively stable and low-risk • “Overall, Vattenfall's A3 rating continues to be supported by (1) the regulated electricity distribution networks and district heating company's breadth and scale of operations; (2) its clean generation operations” portfolio in the Nordics; (3) moderate contribution from regulated • “Leading position in the Swedish power generation market, supported electricity distribution and district heating activities; (4) an increasing by large nuclear fleet and flexible low-cost hydropower generation contribution from contracted renewables; and (5) a solid financial assets” profile with funds from operations (FFO)/net debt close to 25% in • Low power prices in the Nordics over 2020-2021 and a 5%-10% 2019 reduction in power demand following the outbreak of COVID-19 is • “The negative outlook reflects Moody's expectation that Vattenfall's expected to cause a shortfall in earnings financial metrics will be weakly positioned against the guidance for • “Increased cash contribution from subsidised, long-term contracted the current rating, which includes FFO/net debt around the mid- renewables (with wind representing about 24% of our 2019 adjusted twenties in percentage terms and RCF/net debt in the high teens in EBITDA)”. Vattenfall will make significant investments in renewables, percentage terms” in line with its strategy • “Recent investments in wind and heat is expected to increase EBITDA in 2021-2023, Vattenfall is working to actively reduce operating costs and maintain a financial risk profile, namely FFO to debt above 20%

18 Vattenfall credit highlights

BBB+ stable outlook by S&P and A3 100 per cent owned negative outlook by by the Swedish State Moody’s Regulated and A leading European predictable cash flow energy company with from electricity activities across the distribution and district value chain heating

Experienced player in Leading towards renewables and one sustainable production of the leaders in wind power generation Significant growth in A significant renewable production transformation has and climate smart already happened energy solutions

19 Green financing Vattenfall’s green bond framework Use of proceeds - eligible categories with examples of technologies

Renewable energy and related infrastructure Energy efficiency

• Wind energy • Hydro power • Solar energy • Smart grids/meters • Biomass • Fossil-free1 district heating and cooling • Geothermal • Energy recovery • Hydrogen

Electrification of transport and electrification of heating Industry projects

• Infrastructure for electric vehicles • Activities enabling the transformation to fossil-free1 production • Power to Heat

1 Fossil-free: not depending on fossil fuels for its own operations (e.g. for Vattenfall 21 no fossil fuels for energy generation and no fossil products to customers) Green bond investor report Investments under Vattenfall’s Green Bond Framework, as of September 2020

Est. CO Of which Green Capacity/ 2 Vattenfall's Start/ Total Category Project/country Type reduction Bond/spent impact share completion investment (ktonnes)1 SEK million2 Renewable energy Kriegers Flak/ Wind 2019/ and related 605 MW 440 100% 7,700 MDKK 1,529 Denmark offshore 2021 infrastructure Wieringemeer/ Wind 2018/ 180 MW 215 100% 220 MEUR 1,178 Netherlands onshore 2020 Wieringermeer Wind 2019/ Extension/ 118 MW 140 100% 174 MEUR 881 onshore 2020 Netherlands Fossil-free 2019/ Industry projects HYBRIT/Sweden Pilot project – 33% 858 MSEK 211 steel 2021 Total 3,799 Not yet used 6,6483 Grand total 10,447

1 Production from onshore wind estimated to 2.6 GWh/MW installed, from offshore wind to 3.5 GWh/MW installed, and from solar to 1.0 GWh/MW installed. Resulting production is compared against grid average emission factors. Actual production factors and savings will vary. Figures are p.a. 2 Pertains to actual payments to third parties. No acquisition costs or retroactive payments are included. Converted to SEK using year-end exchange rate as per 31 December 2019. 3 We estimate to be fully invested by mid-2021.

22 Dark green shading by CICERO

Governance: Excellent “Vattenfall is deeply committed to Categories Green shading contribute to a green transition towards a low carbon society in the longer run. Renewable energy and Dark Green In addition to subscribing to UN related infrastructure Compact and other sustainability guidelines, Vattenfall has clear and ambitious targets when it Medium to Dark comes to reducing energy consumption and CO2 emissions” Energy efficiency Green Project categories “The Green Bond Principles are clearly fulfilled when it comes Electrification of transport Dark Green to the types of projects to be financed through the Green Bond, and heating the selection process, the management of the proceeds and the reporting” Industry projects Dark Green

23 UN SDG’s Project deep dive – Kriegers Flak

Overview Key data

• Danish Kriegers Flak is the latest and Capacity 605 MW largest of Vattenfall’s recent offshore projects in Denmark, located 15-40 km off Country Denmark the coast in the Baltic Sea Technology type Wind offshore • The project is in construction and in May Turbine model Siemens Games Turbines 8.4 MW 2020 the first foundation was placed in the Ownership 100% Vattenfall seabed Total Investment 10,700 • When in full operation, scheduled by the (SEK million1) end of 2021, this will be Denmark’s largest Green offshore wind farm with a capacity to cover bond/spent 801 Project Timeline the annual electricity consumption of (SEK million2) approximately 600,000 Danish households 2016: Winning of tender Estimated CO2 3 440 ktonnes p.a. reduction 2017: Siemens Kriegers Flak, Completion 2021 Gamesa wins the turbine tender Denmark 2018: Remaining tender packages signed 2019-2021: Construction and installation

2021: Commissioning

1 Year end exchange rate as per 31 December 2019 3 Production from offshore wind estimated to 3.5 GWh/MW installed. Actual production 2 Pertains to actual payments to third parties. No acquisition costs or retroactive payments factors and savings will vary 24 are included. Converted to SEK using year-end exchange rate as per 31 December 2019 UN SDG’s Project deep dive - Wieringermeer

Overview Key data

• Wieringermeer wind farm, when completed Capacity 303 MW will be the largest onshore wind farm in the Country Netherlands Netherlands with a capacity to cover the annual electricity consumption of Technology type Wind onshore approximately 370,000 Dutch households Turbine model Nordex N117/3600 • The project includes re-powering of existing Ownership 100% turbines as well as an extension of the wind Total Investment 1 4,100 farm (SEK million ) Green Bond/spent • Vattenfall has signed a ten-year agreement 2 1,073 (SEK million ) Project Timeline with Microsoft to power their nearby data Estimated CO 2017: Increased the 2 355 ktonnes p.a. center with the power produced from the reduction3 ownership in project Wieringermeer wind farm Completion 2020 with the acquisition of an 2017: 10 year power Wieringermeer, additional 32 turbines Netherlands supply agreement with Microsoft for its datacenter in the Netherlands

2020: Completion

1 Year end exchange rate as per 31 December 2019 3 Production from onshore wind estimated to 2.6 GWh/MW installed. Actual production 2 Pertains to actual payments to third parties. No acquisition costs or retroactive payments factors and savings will vary 25 are included. Converted to SEK using year-end exchange rate as per 31 December 2019 UN SDG’s Project deep dive – HYBRIT HYBRIT – towards the world’s first fossil-free steel

Financing and timeline

The total cost for the pilot phase is estimated to be SEK 1.4 billion. The Swedish Energy Agency will contribute more than SEK 500 million What is HYBRIT? towards the pilot phase and the three owners, SSAB, LKAB and Vattenfall, will each contribute one third of the remaining costs. The • HYBRIT – short for Hydrogen Breakthrough Ironmaking Swedish Energy Agency has earlier contributed SEK 60 million to the Technology – is a joint venture between Vattenfall, SSAB pre-feasibility study and a four-year-long research project. (steel) and LKAB (mining and minerals) • The aim is to replace coking coal, traditionally needed for The pilot phase is planned to last until 2024, after which it will move to ore-based steel making, with green hydrogen the demonstration phase in 2025-2035. • The result will be the world’s first fossil-free steel, with virtually no carbon footprint Main project phases 2020 2025 2030 2035 Why is this important?

• The steel industry is one of the highest CO2-emitting 2016–2017 2018–2024 2025–2035 industries, accounting for 7% of global and 10% of Pre-feasibility Pilot Phase Demonstration Plant Trials Study • 2018–2020 Pilot line design Swedish total CO2 emissions and building phase • Steel demand is set to grow due to population and • 2021–2024 Pilot line trials urbanisation → carbon footprint of the industry needs to be addressed

26 Project deep dive – HYBRIT HYBRIT enables the decoupling of carbon dioxide and energy

HYBRIT: Iron metal is produced by using hydrogen gas as the main reductant. Hydrogen reacts with iron Traditional ore-based oxides to form water instead of CO steelmaking: Reduction 2 reactions in ironmaking represent around 85 to 90

per cent of the total CO2 emissions

The hydrogen used is green hydrogen i.e. produced by electrolysis of water using fossil-free electricity

27 Sustainability deep-dives A strategy and purpose that reflects UN’s agenda 2030 Vattenfall’s strategy is driving our contribution to the UN’s Global Sustainable Development Goals (SDGs)

Overview Examples of contribution to our selected SDGs by sub-category • In 2016, Vattenfall identified SDG Target Examples the most relevant SDG’s for In 2019 we commissioned 474 MW of new renewable capacity. We expect to 7.2 By 2030, increase substantially the share of have commissioned in total 7 GW of capacity by 2023 and have 3–5 GW in the business, where we can renewable energy in the global energy mix. the pipeline to be built after that. have the greatest global impact We collaborate with other stakeholders to test and develop the infrastructure required to integrate more renewables while keeping the grid stable. We 9.4 By 2030, upgrade infrastructure and retrofit have further invested in HYBRIT to enable fossil free steel production and • These remain valid internally, industries to make them sustainable. continue to explore ways to electrify industrial processes to reduce as reflected in our strategy, as emissions. well as for our stakeholders, as In addition to operating more than 18,500 charging points as of Q2 2020, we confirmed by our materiality 11.6 By 2030, reduce the adverse per capita have also partnered with a number of ride and car-sharing services to analysis environmental impact of cities. improve access to mobility while reducing the total number of cars and their emissions. • Vattenfall also contributes to 12.2 By 2030, achieve sustainable management In our hydro power business, we have undertaken a great number of many other SDGs, including and efficient use of natural resources. initiatives to maximise ecological benefit while minimising the impact on 12.5 By 2030, substantially reduce waste those in support of human operations. We sell over 90% of our industrial waste to be reused in other generation through prevention, reduction, industries. rights, at the local level and recycling and reuse. indirectly through our supply Climate risks are part of our ERM. Some examples of climate adaptation 13.1 Strengthen resilience and adaptive capacity chain measures include strengthening our hydro power dams and weatherproofing to climate-related hazards and natural disasters. our network infrastructure against anticipated future climate risks. We collaborated with the city of Berlin on a feasibility study which determined 17.17 Encourage and promote effective public, that a coal exit by 2030 was possible. Moreover, our collaboration with the public-private and civil society partnerships, city of Amsterdam on helping identify families in need of assistance has been building on the experience and resourcing expanded to other cities in the strategies of partnerships. Netherlands as well.

29 Going beyond our own production maximises CO2 impact All parts of society need to adjust – electrifying transports and industry is key to enable a fossil-free life

Total green house gas emissions Transports 1 MtCO e Sweden (2018) 52 MtCO2e 2 3 2 1 16 10 7

5 Cars Heavy Trucks Other Road Air, Transports Railroad, 7 Shipping Industry

MtCO2e 16 64% of total 5 17 Emissions 3 3 6 17

Iron & Steel Cement Refineries Other

There is huge potential to reduce industry emissions through Besides fossil free steel via the HYBRIT initiative, with a 10% electrification. Vattenfall has discussions and research ongoing reduction potential of total Swedish emissions when fully with (potential) partners in different sectors. implemented, Vattenfall sees potential in other sectors like cement, refinery, chemical, agriculture, shipping and aviation

1 Source: Swedish Environmental Protection Agency 30 Electricity - from a power source to a source of innovation Together with our partners, we pave the way for a new generation of transports, industries and materials

Research project for Cooperation in large Feasibility study on Electrification of Co-operation for e- a carbon dioxide- scale bio-diesel electrified mines and smelters mobility free steel industry production cement production

Green guaranteed Support of a major Northern Europe’s Powering Storage projects at a energy delivery enterprise for largest charging sustainable number of wind parks large customers, battery production network for e- datacenters e.g. in Sweden vehicles

31 Stakeholder materiality analysis supports strategic focus According to our stakeholders, Vattenfall’s core strategy is aligned with the areas of greatest potential impact

Materiality matrix Top 7 most material topics

Reducing CO2 emissions ✓ ✓ ✓ ✓ ✓ ✓

Providing affordable energy ✓ ✓

Investing in renewable energy ✓ ✓ ✓ ✓ ✓ ✓

Minimising non-CO 2 ✓ ✓ emissions

Protecting nature and ✓ biodiversity

Providing affordable, stable ✓ ✓ and flexible grid infrastructure

Developing sustainable solutions for customers and ✓ ✓ ✓ ✓ partners Between May and June 2020, over 2,900 stakeholders from Vattenfall’s main markets have rated the most material topics based on importance and significance of impact on the environment, society, or economy. Few take away things are mentioned below, • Vattenfall‘s strategy remains in line with stakeholder‘s expectations. Covid-19 has had little impact on expectations • Affordability, CO2 reduction and renewables remain top 3 important topics • Interview responses highlighted the importance of public acceptance to realise energy transition and engaging with local communities

32 Vattenfall’s 2030 emissions targets have been approved by the Science Based Target initiave

Project Vattenfall Scope 1 & 2 emissions vs. SBT 2°scenario Vattenfall Total 2017 Scope 3 Emissions

25 16 14 20 20% reduction by 2030

12 e

e 10 2 2 15 Excluded from target but part of

8 other reduction programmes MtCO MtCO 10 2030 target set at 6 12.5 Mt, a 38% 4 5 reduction 2

0 0 Use of sold Fuel- and Waste Capital goods Upstream Other 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 products energy- generated in transport and VF Emissions (tCO2e) SBT 2° target (tCO2e) related operations distribution activities

• Target set for 38% reduction from 2017-2030 • Target set for 20% reduction of emissions from use of sold products • Based on planned coal phase out in heat operations by 2030 • These accounts for nearly 75% of Vattenfall’s total Scope 3 emissions and primarily consists of natural gas sold to customers • Requires continued successful execution of major projects (fuel switches) • Programmes are in place to reduce emissions in other categories (such as

supplier CO2 footprint, reducing business travel) but we have not included them in the target for the sake of simplicity. • We will focus on further expanding non-fossil heating solutions such as heat pumps, solar thermal, non-fossil gas, and others

33 Biodiversity – examples of actions We strive to minimise any direct and indirect negative impacts on biodiversity throughout our operations

Business area Aim Examples “Laxeleratorn” is a unique, large-scale laboratory for hydro power-related Identify new solutions to reduce environmental environmental and hydraulic experiments that was inaugurated in 2018. It combines impact of hydro power production knowledge of biology and hydraulics to find solutions that allow and attract fish to safely pass by the power plant with the smallest possible effect on operations. In Biotope restoration and species protection 2019, the main projects focused on innovation for downstream fish migration such as bubble curtains and flexible nets to avoid turbine passage. Hydro power Knowledge building activities includes both We are investigating how we can use machine learning to identify and count animal research and pilot studies species and how environmental DNA (eDNA i.e. the residual DNA left in the ambient environment by plants and animals) can be used to quickly identify species in our Preserve and manage biodiversity and hydro operations. This would be less resource-intensive than the process is today enhance recreation values and make it easier to evaluate the effect of measures like fish compensation programmes.

Limit impacts on the marine environment Many R&D projects are conducted at the European Offshore Wind Deployment Centre (EOWDC) located in Aberdeen Bay, Scotland. A first project was conducted during construction of the Aberdeen Bay offshore wind farm, where a new type of Offshore wind jacket foundation was used, so-called suction buckets. Instead of monopiles driven power into the seabed, giant upside-down buckets paired with jacket substructures anchor Reduce impact on and contribute to the wind turbines to the seabed. The method is virtually noiseless, which reduces the conservation of fauna disturbance to marine life.

Clearance work for power lines opens meadow-like fields for threatened and rare species, like the butterfly marsh fritillary. With GIS mapping and field inventories Power Maintenance of habitats and protecting performed during 2018, important biodiversity hotspots have been identified, and distribution species adjusted clearance plans have been developed accordingly. A pilot project outside Stockholm uses goats instead of machines to clear the landscape, which favours biodiversity.

34 Sustainability throughout the supply chain

Key ongoing activities Sustainable supply chain across four primary sourcing and • Clearly define the environmental, social, and governance opportunities and purchasing streams (2019 data) risks per business area to deliver impact in our supply chain No new suppliers • Further expand integration of sustainability requirements in tenders Goods and ~26,000 19 100% from high-risk • Increase clarity on potential human rights risks in our heat operations services countries • Fully implement the supplier risk assessment tool to enable identification and No new suppliers prioritisation of risks related to sustainability issues in the supply chain, Commodity ~35 6 100% from high-risk including potential human rights issues fuels countries • Actively contribute to the Dutch initiative to work towards a sector-wide covenant covering the wind supply chain No new suppliers • With Bettercoal, further discuss and address the identified main challenges Heat fuels ~80 3 100% from high-risk and opportunities with Russian stakeholders countries • Continue and expand cross-industry collaborations to build capacity among Nuclear ~10 8 100% 100% suppliers and push joint sustainability requirements fuel

Vetting process to ensure compliance with the Code of Conduct for Suppliers Number of Number of site Share of new Share of new suppliers audits conducted suppliers that suppliers from have undergone high-risk social/environme countries that Supplier assessment ntal assessments have undergone Initial risk Supplier screening Supplier audits Corrective actions Continuous assessment Potential suppliers are High-risk country The supplier addresses improvement social/environme Our suppliers are screened to identify supplier: During an on- non-compliances by suppliers’ sustainability ntal assessments assessed by country and take actions site audit the supplier’s providing and performance is being risk. For high-risk towards those with compliance with our implementing a monitored and followed country suppliers, a potential financial, sustainability corrective action plan. up to ensure sustainability audit of reputational or supply requirements is continuous Our supplier base consists of approximately 26,000 suppliers across our four primary the production facilities risks. evaluated. Improvement. sourcing and purchasing streams: goods and services; commodity fuels: coal, is required. biomass, gas and oil; directly sourced heat fuels; and nuclear fuel.

For more info: See page 160-161 in Vattenfall’s Annual- and Sustainability Report 2019 35 Towards a circular economy We are committed to enable sustainable use of resources and contribute to a circular economy

A circular economy is based on the principles of keeping products and materials in use, Examples of activities designing out waste and pollution, and using regenerative natural systems. It is a Recycling excess heat sustainable alternative to the current ‘take-make-dispose’ linear economic system. The In the initiative Samenergi, transition to a more circular economy is central to the Green Deal – EU’s policy road map Vattenfall collaborates with SME’s towards a low-carbon, sustainable society. to help them recycle excess heat In circular systems, focus is on extending the life-time of products and materials, sharing and utilise it in the district heating and pooling of resources, repairing, reusing and recycling to create closed-loop systems, network. (Image from Lindvall’s and utilizing smart designs to minimise resource input and the generation of waste, coffee manufacturing site, a pollution and CO2 emissions. Photographer: John Guthed Samenergi partner.) Phase-out of creosote poles Vattenfall contributes to the circular economy: In a circular economy, hazardous We invest heavily in renewable energy substances must be kept out of ✓ - Our key role as an energy company is providing renewable energy to drive the circular material streams. Vattenfall is economy. phasing out creosote poles from We use resources in smarter ways distribution grids. Alternative materials and methods are used ✓ - We use life cycle assessments to assess and manage environmental performance and tested for new poles. across the full value chain. We also work to design our assets and processes to reduce resource consumption, increase reuse and recycling, and extend the lifetime Declaring life cycle impacts of our assets. Vattenfall provides transparent, We offer new products and business models verified and comparable information ✓ - We are developing new products and energy solutions, as-a-service based models about the life-cycle resource and digital solutions to integrate small scale producers. utilisation and environmental impacts from our electricity We change unsustainable processes and sectors ✓ generation through environmental - We switch fuels, partner with industry to make materials more sustainable and fossil product declarations®. free (e.g. steel, cement, fuels), and work to electrify the transport sector.

36 Adaptation to climate change We continuously monitor, invest in and modernise our assets to ensure safety and resilience ▪ There is increasing urgency linked to climate change and the reduction of emissions needs to accelerate. Climate change affects Vattenfall through both physical effects on our assets and operations, and through changes associated with the transition to a fossil-free society. We are committed to our goal of enabling fossil-free living within one generation and have a high focus on adapting to change. ▪ Vattenfall supports the disclosure of climate related risks and opportunities in accordance with recommendations from the Task Force on Climate- related Financial Disclosures (TCFD).

Climate change affects Vattenfall Ensuring security of supply and resilient operations Today, the world is about 1 ºC warmer than preindustrial levels and it is rising. In 2019 an assessment of effects of climate change and status of adaptation was Climate change leads to physical changes in parameters such as temperature, conducted for Vattenfall’s operations. It showed that there is a good general level of rainfall and sea level. This will affect Vattenfall’s assets and operations. awareness and measures in place to reduce climate-related risks.

As an example, changes in the frequency and magnitude of extreme weather Examples of measures to ensure resilient operations are replacing overhead events such as strong winds, flooding or forest fires can lead to infrastructure powerlines with underground cables, tree clearance, flood protection, investments to damage. Similarly, changes to rainfall and snowmelt affects river flows, which adapt hydropower dams to future higher flows, and improved monitoring. Vattenfall has relevance for our hydropower production, planning and dam safety aspects. will continue to have strong focus on management of climate risks, through e.g. Vattenfall continuously works to improve the safety and robustness of our scenario analyses and increased focus on supply chain aspects. operations.

37 Environmental, social and governance (ESG) ratings Vattenfall is assessed by several sustainability rating agencies on its ESG performance

We aim to be as open and transparent as possible in our sustainability reporting and we are proud to be highly ranked for our sustainability performance. The below table shows the agencies we actively engage with and our most recent rating scores

Rating Agency Rating focus Score Latest assessment

The leading system globally for disclosing environment data for investors, Score A: top 2% of all rated companies January 2020 companies, cities, states and regions

An online platform that enables companies to monitor the CSR performance of Gold rating: top 1% of all rated companies December 2019 their supply chains by providing supplier sustainability ratings and top 3% in the sector

ESG rating mainly for the investment community. The assessment spans a Score B “Prime”: highest decile of broad range of ESG issues that are analysed on the basis of up to 100 rating January 2020 companies assessed in the sector criteria, most of them sector specific

ESG rating mainly for the investment community. Uses a rules-based methodology to identify industry leaders and laggards. Ranks companies Score AA “Leader”: meaning top 26% of June 2020 according to their ESG risk exposure and how well they manage those risks companies assessed in the sector. relative to peers.

ESG rating mainly for the investment community. Uses a two-dimensional ESG risk rating: Medium (Strong materiality framework that measures a company’s exposure to industry specific management score but high exposure). June 2020 material risks and how well a company is managing those risks. Top-15% of companies in subindustry

38 Customers & Solutions Customers & Solutions Providing sustainable energy solutions and services to retail and business customers

Overview Highlights Key data • Strong incumbent positions in core markets 10.2 million customer contracts in FY 2019 FY 2018 • A growing customer base with high loyalty Europe Net sales (SEK bn) 89.9 81.3

• Strong expertise across the full energy External net sales (SEK 87.3 78.9 value chain means that we can offer 89.5 TWh of electricity sold bn) simple integrated solutions to satisfy 1 increasingly sophisticated customer needs 14,900 connected charging points for Underlying EBIT (SEK bn) 1.3 1.3 • Brand perception on positive trend electric vehicles Sales of electricity (TWh) 89.5 88.3 according to several surveys - of which, private customers 28.0 27.4 • Well-developed IT infrastructure keeps operations cost-effective - of which, resellers 6.5 4.9 - of which, business • Our e-mobility charging network - 55.0 56.0 customers InCharge - is one of the largest in northern Europe Sales of gas (TWh) 54.2 55.5 Net Promoter Score (NPS) +1 +1 relative2

1 Operating profit excluding items affecting comparability 2 NPS is a tool for measuring customer loyalty and for gaining an understanding of 40 customers’ perceptions of Vattenfall’s products and services Customers & Solutions Market overview Vattenfall and top-3 players market share, main markets • Customers & Solutions supplies electricity, gas and energy solutions to retail and business customers, with 10.2 Netherlands Finland million customer contracts 20-30% 20-30% • We are one of the market leaders in the retail and business segments in Sweden (~900,000 electricity 35% contracts) and in the Netherlands (3.6 million electricity and gas contracts) 8-12% 5-15% • In Germany we supply electricity and gas to retail 80% customers (3.8 million contracts) and to businesses. In Berlin and Hamburg, we are the market leader in the B2C B2B B2C B2B electricity retail segment • In Denmark, Finland and France our position is that of a challenger in sales of electricity and gas Sweden Germany Customer contracts (total), in millions 15-25% 15-20% 12 Feenstra added 35% 7-12% 10 50% 8 2-5% 6 10.2 9.9 8.7 9.7 4 8.3 8.4 B2C B2B B2C B2B 2 Vattenfall B2C market share Vattenfall B2B market share Top-3 players market share 0 2015 2016 2017 2018 2019 H1 2020

41 E-mobility – enabling the electrification of transports InCharge offers everything from infrastructure and hardware installation to software and connected services

The e-mobility market is rapidly developing, E-mobility markets and new players are shaping their roles in the InCharge is fully owned by Vattenfall but value chain. Vattenfall therefore needs to be grows together with our partners. We innovative and agile, taking advantage of take care of all the details with end-to- the multitude of services our organisation end services, offering everything from as well as our partners can offer. infrastructure and hardware installation to software and connected services – all One example is Flexpower in Amsterdam backed up with expertise and advice. where InCharge charging points are steered based on daily load curves from the grid In close collaboration with government operator and forecasts for local neighborhood officials and planners, InCharge makes it solar panel production. easier for cities to become greener and Number of charging points (thousand) cleaner. Businesses, large and small, 18.5 housing associations and estates, as 14.9 well as private homeowners all have 13.3 Partners (examples) flexible options to choose from our 10.5 portfolio. 5.0

H1 2018 H2 2018 H1 2019 H2 2019 H1 2020

For more info: See page 34-35 in Vattenfall’s Annual- and Sustainability Report 2019 42 Using digitalisation to enhance the customer experience

Customers increasingly expect instant information and access. Apps and other digital channels are gradually becoming the main interface for customer service and interaction. We strive to optimise the customer experience by accelerating digitalisation. We aim to meet our customers where they want, make it easy for them to handle their energy needs and to solve their queries in one click.

Example 1 - Digitalisation of customer service (NL) Example 2 – A fully digital product offering (DE) The automated chatbot Nina has been available on our Dutch website for Enpure offers a fully digital product line for power and gas for the “digital two years native” target group with 100% fossil-free product portfolio: >8m Dutch citizens uses WhatsApp daily → WhatsApp launched as an − fully digital experience via Enpure App or Web additional customer service channel in 2019 − hassle-free product with 12-month price guarantee, monthly cancellation option and no emissions Today 40.000 conversations per month are handled through WhatsApp − first bilingual (DE/EN) product line within German B2C market ✓ Twice as efficient compared to phone − different look and feel from traditional channels ✓ Ease-of-use and fast response lead to highest customer satisfaction Enpure has been on the market since 2016, and from September 2020, (measured by NPS) and reduced operating costs vs other channels the product offering is fully CO2 neutral, reaching tens of thousands of Currently, integration of Nina and WhatsApp is being piloted, and results customers indicate that 20% of queries can be handled with robotics, with further potential for improvement

Nina Chatbot

Customer Service via WhatsApp

43 Power Generation Power Generation One of Europe’s largest providers of fossil-free electricity

Overview Highlights Key data

• Largest segment by power production volume in FY 2019 FY 2018 Vattenfall, contributing to our position as Europe’s 7.2 GW nuclear power second largest provider of fossil-free electricity Net sales (SEK bn) 102.4 100.0 • Century-long roots in hydro power and a leading position in Sweden's hydro power development 11.7 GW hydro power External net sales (SEK bn) 38.4 36.1 • Major owner of nuclear power with vast Underlying EBIT1 (SEK bn) 15.4 9.4 experience of nuclear operations, 5.1 SEK bn services revenues decommissioning and management of radioactive waste and spent nuclear fuel Electricity generation (TWh) 89.2 90.5 7.1 GW PPAs under management • One of the leading energy trading companies in - of which, nuclear 53.3 55.0 Europe offering reliable, responsible and flexible access to all relevant commodity wholesale - of which, hydro 35.7 35.5 markets Customer sales of electricity • Sourcing of fuels and carbon credits for Vattenfall 27.0 28.7 and third parties as well as optimising and (TWh) managing risk and flexible assets of Vattenfall's - of which, resellers 22.8 24.6 fuel portfolio • Proprietary trading within the risk mandate set by - of which, business 4.2 4.1 Vattenfall's Board of Directors customers • Responsible for Sweden’s leading maintenance service business in the energy sector

Stornorrfors power plant, Sweden

1 Operating profit excluding items affecting comparability 45 Nuclear power Offline Sweden In operation Vattenfall’s nuclear power plants • Vattenfall owns ten nuclear reactors. Seven reactors are located in Sweden (four at Ringhals, three at Forsmark), Forsmark and three in Germany (Brunsbüttel, Krümmel and a minority stake in Brokdorf) Ringhals • Six of our reactors are in commercial operation in Sweden (five after Ringhals 1 closure by year-end 2020) and Stade Brunsbüttel one reactor; Brokdorf, is in commercial operation in Germany (to be closed by year-end 2021) Brokdorf Krümmel • Vattenfall’s power generation in 2019 amounted to 53.4 TWh (55.0). Average availability was 87.8 % (88.9%) Germany

Nuclear Power Plant list Nuclear Installed Vattenfall Commission Final operating Country Co-Owners Operation status Decommissioning status Power Plant Capacity (MW) ownership share Year year Ringhals 1: 1976; E.ON Kärnkraft Ringhals 2: 1975; Ringhals 2: 2019; Preparation for decommissioning Ringhals Sweden 3,967 70.4% In operation Sverige AB (29.6%) Ringhals 3: 1981; Ringhals 1: 2020 of Ringhals 1 by year-end 2020 Ringhals 4: 1983 E.ON (8.5%) and Forsmark 1: 1980; Forsmark Sweden 3,271 66.0% Mellansvensk Forsmark 2: 1981; - In operation - Kraftgrupp (25.5%) Forsmark 3: 1985 Brunsbüttel Germany 771 66.7% E.ON (33.3%) 1977 2007 Offline Decommissioning mode Planned to initiate Krümmel Germany 1,346 50.0% E.ON (50.0%) 1984 2011 Offline decommissioning in 2020 PreussenElektra Undergoing decommissioning Stade Germany 640 33.3% 1972 2003 Offline GmbH (66.7%) since Oct 2005 PreussenElektra Brokdorf Germany 1,410 20.0% GmbH (80.0%) 1986 31 Dec 2021 In Operation -

46 The financing system for post-operational nuclear costs Financial implications of the various steps in the financing systems in Sweden and Germany

In Sweden Sweden Nuclear power plant owners in Sweden are Nuclear Payments based on obligated to finance the costs for dismantling and Swedish Nuclear Financial Funds from Adjusted net power generated KWh EBIT Waste Fund implications operations (FFO) debt (AND) management of spent nuclear fuel. The financing operators is handled by payment of fees for each generated Valuation of Provision value depreciated N/A Included in AND Swedish National The fair value of nuclear over operating life-time of kWh to the Swedish Nuclear Waster Fund, which Debt Office the Vattenfall provisions nuclear power plant manages paid-in funds. The fund also reimburses decides on Group’s share in owner for the payment to SKB (responsible for disbursements the Swedish Payments to the No impact Negative impact through Increase fund long term safe-handling of radioactive waste) from the fund Nuclear Waste Swedish Nuclear payment to the Swedish balance (offset Waste Fund Nuclear Waste Fund AND) meeting the obligation based on Swedish law. Fund was SEK 46 billion as of 31 Decommissioning No impact FFO neutral AND neutral December 2019 activities In Germany Following the nuclear accident in Fukushima, Swedish Nuclear Fuel and waste Management Company Remaining post-operational costs for the entire Swedish nuclear Japan in 2011, Germany’s government decided to (SKB) fleet shut down all the 17 nuclear power plants by 106 1 2022. The German state took over the SEK billion 2 Intermediate responsibility for interim and final storage of low Final repository Decommissioning and dismantling Encapsulation storage (Clab) Other and intermediate level spent nuclear fuel in 2017, 39% 28% 13% 11% 9% funded by the contributions that the NPP operators paid to state-controlled fund. The Germany German Federal Council must agree on a suitable Financial Funds from Adjusted net EBIT location for permanent storage of spent nuclear Nuclear implications operations (FFO) debt (AND) fuel by 2031 and final repository by 2050. The power German state operators Valuation of Non-operating plants – N/A Included in AND spent nuclear fuel and radioactive waste must be nuclear change in provision valuation stored in interim storage close to the nuclear provisions directly impacts EBIT power plant. Decommissioning Transport Intermediate Decommissioning N/A Negative impact AND neutral and dismantling storage Final repository activities

1 Remaining costs based on the latest calculation (plan 2016). 2 Decommissioning and dismantling are the responsibility of the nuclear power operators 47 and are not included in SKB’s operations. Hydro power

Hydro overview River stream installed capacity (MW) • We own and operate hydro power plants, most of which are located in Sweden. Additional sites Finland Sweden Total: 112 are located in Germany (pumped storage), Finland and the Netherlands. In 2019, Vattenfall’s Total: 8,622 84 hydro power capacity amounted to 11.7 GW and the generation to 35.8 TWh (35.5) 4277 28 • In response to the increasing value of dispatchable production, investments in our hydro

power stations have focused on refurbishments and upgrades that increase availability and Indalsälven Koitajoki Others flexibility. We are also undertaking a number of initiatives to reduce the negative effects of 1964 Lule älv 1335 Ljungan & hydro power on ecosystems and biodiversity 1046 Nurmonjoki Gimån Kalajoki Major Hydro Power Plants Skellefte älv Kymijoki Installed Vattenfall Commission Project Turbine Type Country River Koitajoki

Capacity (MW) ownership share Year Others Lule älv Lule

Ume älv Ume Ume älv

Harsprånget Francis 871 Sweden Lule älv 100% 1951 Ångermanälven

Letsi Francis 486 Sweden Lule älv 100% 1967 Ångermanälven Upperuds älv Dalälven Messaure Francis 463 Sweden Lule älv 100% 1963 Netherlands Total: 6 Porjus Francis 430 Sweden Lule älv 100% 1915 Göta älv Hydro PowerHydro 6 Stornorrfors Francis 599 Sweden Ume älv 75% 1958 Rhine Goldisthal Francis/Ossberger 1,060 Germany Schwarza 100% 2004 Elbe Germany Große Große Markersbach Francis/Ossberger 1,046 Germany 100% 1981 Total: 2,889 Rhine Mittweida Mittweida 1060 1046 783 Bode Hohenwarte Obere Francis 320 Germany 100% 1966 II Saale Obere Pumped Pumped storage Schwarza Große Others Schwarza Saale Mittweida Hydro Power Plant Pumped Storage 48 The inherent flexibility of Vattenfall’s hydro power visualised

Intrahourly Hourly Daily Seasonal Yearly fluctuations fluctuations fluctuations fluctuations fluctuations

Balancing and Intraday & Day Ahead Day Ahead markets/ contracts Forwards, markets for futures Forwards, markets for futures Intraday markets/ contracts Up and Hydro Hydro Hydro Hydro Hydro downward regulation

25000 WEEK 4000 YEAR

20000 3000

15000 Hydro Hydro 2000

GWh Wind MWh/h 10000 Wind CHP* CHP* 1000 5000 Nuclear Nuclear 0 0 1 13 25 37 49 61 73 85 97 109 121 133 145 157 1 5 9 13 17 21 25 29 33 37 41 45 49

Flexible hydro power plays an instrumental role in an energy system with more and more wind and solar power

The intensified focus on climate change and CO2 emissions has contributed to significant growth in installed capacity of renewable energy sources. However, the intermittent nature of these energy sources makes it necessary to have back-up capacity. Flexible hydro power can offer its huge reservoirs of stored water as a giant “green” battery for the Nordic region and other markets (with the help of interconnectors)

*Combined heat and power plant (CHP) 49 Sample deals on Corporate PPAs and PPAs

Vattenfall will supply factories and stores of soft drink manufacturer AG Barr with 22 GWh per year from wind farms in the UK (tenor 10 years). 220 GWh

Vattenfall has signed a 10 year agreement with Microsoft to CPPA: power its international data center operations in the Netherlands 1.177 GWh from an adjacent wind farm. 909 GWh

Vattenfall will provide solar power to Deutsche Telekom suvsidairy „Power & Air Solutions“ from a 60 MW solar farm in North Germany over a tenor of 10 years. 48 GWh

Vattenfall has signed a 15 year agreement with Aquila Capital to PPA: acquire wind power from the 163 MW wind park Kråktorpet in 340 GWh Sweden. 340 GWh

50 Wind Wind One of the biggest renewable energy players in Europe

Overview Highlights Key data • Strong position within offshore wind with an extensive pipeline 2.1 GW installed offshore wind capacity FY 2019 FY 2018 • A pioneer within offshore wind from the outset and a leader in levelised energy Net sales (SEK bn) 13.5 11.9 1.2 GW installed onshore wind capacity cost reduction External net sales (SEK bn) 6.6 5.7 • One of the largest producers of onshore > 1 GW solar and batteries pipeline Underlying EBIT1 (SEK bn) 4.2 3.7 wind power in Denmark and the Netherlands Electricity generation (TWh) 9.5 7.8 • Highly experienced team managing all key Investments (SEK bn) 9.2 5.6 processes with close supplier Electricity generated (TWh) 9.5 7.8 collaboration along the value chain • Strong platform and project execution track record • Reputation as a trustworthy partner helps securing financing and off-takers • Front-runner on innovative solutions within solar & batteries such as co-location with wind farms and shared infrastructure

Slufterdam onshore wind farm, the Netherlands

1 Operating profit excluding items affecting comparability 52 A leader in the renewables transition Strong position within offshore wind and extensive pipeline ahead

Geographical overview – we develop and operate wind and Competitive landscape – Offshore secured capacity (GW) solar farms in our core European markets1 Sweden In operation: 345 MW Orsted 1 17.7 Under construction: 353 MW RWE 2 10.2 UK Denmark Vattenfall 3 9.1 In operation: 1,083 MW In operation: 802 MW 6 Iberdrola 4 17.6 Under construction: 240 MW Under construction: 605 MW Equinor 5 6.7 In development: 3,940 MW In development: 344 MW SSE 6 10.1 (only UK) 12 Macquarie 7 4.5 Aberdeen Bay Engie/EDP 8 4.6 Vesterhav EDF 9 3.4 Horns Rev 3 Lillgrund Sandbank Horns Rev 1 Operational Pipeline (Europe) Pipeline (Non-Europe) Ormonde Danish Kriegers Flak 7 Dan Tysk Alpha Ventus Norfolk Boreas Netherlands 14 Norfolk Vanguard In operation: 485 MW Under construction and pipeline1 Under construction: 1,859 MW Kentish Flats Kentish Flats Extension 2 Thanet > 3 GW > 4 GW > 1 GW 60 MW Offshore wind project Hollandse Kust Germany in operation Zuid 1-4 In operation: 658 MW Wind projects Wind projects Solar projects Batteries Offshore wind project in under construction/development NoordzeeWind in development in development pipeline construction Number of onshore wind farms country-wide

1 As of June 2020 53 Europe continues to be a highly attractive growth market Despite significant ramp-up in renewables, much more growth is expected in the coming decade

Increasing demand and phase-out of coal Double-digit growth across renewable technologies until 20301 gives plenty of room for growth in Europe Europe ROW2 Offshore wind (GW) Onshore wind (GW) Solar (GW) Increased demand 150 driven by 133 974 2077 Investmentneed 1000 2100 electrification trend

750 664 100 1400 1239

63 500 Expected lifetime 348 ~20-25 years 50 700 63% 448 250 22 44% Significant 68% 42% phasing-out 21% 77% 39% 21% 0 0 0 26% Today ~25 year horizon 2018 2025 2030 2018 2025 2030 2018 2025 2030

Europe 17 GW 43 GW 84 GW 136 GW 279 GW 430 GW 115 GW 266 GW 433 GW

ROW 5 GW 20 GW 49 GW 212 GW 385 GW 545 GW 333 GW 973 GW 1,644 GW

1 Source: Bloomberg NEF – NEO 2019 2 ROW excludes China 54 Pipeline of opportunities supports Vattenfall ambitions Many projects in pipeline and several upcoming auctions in relevant markets

Installed capacity, projects in construction and in development (GW) Upcoming auctions in relevant markets5

2022 4 Norfolk Boreas Name/Description: Floating offshore wind 2022 Capacity: 250 MW Name/Description: North of the Norfolk Vanguard4 >4.0 GW in development Support: NA Wadden Islands Capacity: 700 MW Vesterhav projects 2022 Support: Zero-subsidy bid Thanet Extension Name/Description: Offshore tender South Kyle Capacity: 1,000 MW 2022 Support: Feed-in-premium Name/Description: Hesselo Capacity: up to 1,200 MW Support: Feed-in-premium Strategic target: Hollandse Kust Zuid 1-4 2022 2.3 GW commissioned Name/Description: Normandy renewables capacity Capacity: 1,000 MW 2021 2016 - 2020 > 3 GW Support: Feed-in-premium Other in construction Name/Description: Offshore auction Blakliden + Fäbodberget3 Capacity: 700-900 MW 2021 Support: TBC Danish Kriegers Flak2 Name/Description: My 2021 CfD round Wieringermeer Ext 2021 1 Capacity: NA Wieringermeer Support: Contract for Difference Name/Description: Hollandse Kust 2.3 GW Horns Rev 3 (west) Slufterdam Aberdeen Bay Capacity: 1,500 MW Pen y Cymoedd Support: TBC Ray 3.4 GW 2021 Sandbank installed capacity Name/Description: Thor 2.2 GW Capacity: 1 GW 2021 Support: Contract for Difference Name/Description: Offshore auction 2021 2015 2022 2025+ Capacity: 1,000 MW Support: Feed-in-premium

1 Partially commissioned 5 Source: Windeurope.org 2 Danish Kriegers Flak expected commissioning 2021 55 3 Blakliden + Fäbodberget expected commissioning 2022 4 Commissioning expected in 2027-2029 Maturing renewables - challenges and opportunities LEC development will be key going forward

Maturing renewables industry creates opportunities and Vattenfall competes in this space by driving and leading the challenges LEC development

174 Levelised bid levels (€/MWh) 154

Projects with no 103 governmental revenue stabilization 73 61 55 50 43

2014 2015 2015 2016 2016 2016 2016 2017 2018 2019 2019 UK DE DK NL DK NL DK DE NL FR NL

…and leveraging several competitive advantages …while our good reputation helps securing corporate PPA's

Leverage over suppliers Access to investors • Latest access to technology and off-takers Wieringermeer Blakliden/Fäbodberget • Joint cost-out programs • Leveraging delivery reputation • Leveraging vertical integration 10-year deal with Microsoft signed 20-year deal for 60% production Project access in key markets Internal optimisation / cluster synergies in 2017 to supply nearby data volume of the 353 MW onshore Based on: Through e.g. centre. It is one of the largest wind wind farm, signed with Norsk • Financial & technological ability • Accumulated O&M experience PPAs in the Netherlands​ to date Hydro in 2018​ • Company credibility • Data

56 Examples of partnership structures within wind and solar

DanTysk and Sandbank Ormonde (UK) Coevorden (NL) Blakliden/Fäbodberget South Kyle (UK) (DE) (SE) Status: In operation Status: In operation Status: In operation Status: Status: FID Specs: Offshore wind Specs: Offshore wind Specs: Solar (7 MW) Under construction Specs: Onshore wind (288 + 288 MW) (150 MW) Partner: Patronale Specs: Onshore wind (240 MW) (353 MW) Partner: Stadtwerke Partner: AMF Deal structure: Sale of Partner: Greencoat UK München Deal structure: Sale of 100% stake in operating Partner: Vestas and Wind Deal structure: Jointly 49% stake in operating solar farm. PKA Deal structure: Sale owned subsidiary wind farm. Vattenfall Deal structure: Sale of upon completion and (Vattenfall share 51%) continues to operate the 70% stake before operation of the wind that constructed and now wind farm as majority construction. In addition, farm for a minimum of 10 operates the wind farm shareholder ~60% of the production is years. Vattenfall will also covered in 20-year PPA purchase the power for a (with Norsk Hydro) period of 15 years

57 Wind & Solar - Installed capacity (MW1) Q2 2020

Solar Onshore Offshore Total United Kingdom – ROC scheme Denmark – FIT scheme The Netherlands – MEP/SDE(+) United Kingdom 5 391 687 1.083 Thanet 300 Horns Rev 1 (60%) 158 NoordzeeWind (50%) 108 Denmark 0 237 565 802 Ormonde (51%) 150 Horns Rev 3 407 Princess Alexia 122 The Netherlands 29 348 108 485 Aberdeen 97 Klim (98%) 67 Wieringermeer 108 Sweden 0 234 110 345 Kentish Flats 90 Nørrekær Enge 1 (99%) 30 Slufterdam 29 Germany 3 19 636 658 Kentish Flats Extension 50 Rejsby Hede 23 Eemmeerdijk 17 Total (MW) 37 1.229 2.106 3.372 Pen Y Cymoedd 228 Hagesholm 23 Irene Vorrink 17 Ray 54 Nørre Økse Sø 17 Hoofdplaatpolder (70%) 10 Edinbane 41 Tjæreborg Enge 17 Reyndersweg (50%) 9 Clashindarroch 37 Hollandsbjerg 17 Echteld 8 Swinford 22 Bajlum (89%) 15 Coevorden 7 Solar Parc Cynog 4 DræbyFed 9 De Bjirmen 6 Onshore PV@Cynog 5 Ryå 8 Oom Kees (12%) 6 Offshore Pendine 5 Ejsing (97%) 7 Oudendijk 5 Installed capacity (MW) 1.083 Lyngmose 5 Mariapolder 5 Installed capacity (MW) 802 Hiddum Houw 4 Sweden – certificate scheme Eemshaven 6 Lillgrund 110 Germany – EEG scheme Velsen 2 Stor-Rotliden 78 DanTysk (51%) 288 Enkhuizen 2 Högabjär-Kärsås (50%) 38 Sandbank (51%) 288 Hemweg 2 Höge Väg (50%) 37 alpha ventus (26%) 60 Decentral Solar installations 12 Hjuleberg (50%) 36 Jänschwalde 12 Installed capacity (MW) 485 Juktan (50%) 29 Westküste (20%) 7 Östra Herrestad 16 Decentral Solar installations 3 Installed capacity (MW) 345 Installed capacity (MW) 658

1 Capacity in operation: total capacity of the wind farms that Vattenfall has an ownership in. Minority shares included as 100% 58 Main renewables projects in our 5 core countries

Capacity Support Duration Owner- Com- Offshore Country Name Awarded Current status (MW) scheme of support ship (%) missioning Onshore DK Kriegers Flak 605 FIT X 50.000hrs 100 2021 Under construction NL Hollandse Kust Zuid 1-4 1 520 - X - 100 2022/2023 FID taken and main contracts signed Solar Vanguard positive consent achieved 1st July; UK Norfolk projects 3 600 CfD 15 yrs 100 2027-2029 Batteries Boreas DCO Examination extended until Oct-20 Geotechnical Site Investigation Offshore finalized. DK Vesterhav 344 FIT X 50.000hrs 100 2024 Environmental Impact Assessment reports are up for public hearing. Consent refused by BEIS, feasibility study for a DK Thanet Extension ~340 CfD 15 yrs 100 2024 smaller wind park initiated NL Wieringermeer 185 SDE+ X 15 yrs 100 2019/2020 All WTG erected, first revenues NL Wieringermeer ext. 118 SDE+ X 15 yrs 100 2020 Commissioning ongoing NL Moerdijk 27 SDE+ X 15 yrs 100 2021 Under construction NL Haringvliet 22 SDE+ X 15 yrs 100 2020 Under construction NL Nieuwe Hemweg 19 SDE+ X 15 yrs 100 2021 Under construction UK South Kyle 240 - N/A - 100 2022/2023 Under construction NL Jaap Rodenburg 38 SDE+ X 15 yrs 100 2021 Under construction SE Blakliden + Fäbodberget 353 Certs N/A - 30 2022 Under construction NL Haringvliet 38 SDE+ X 15 yrs 100 2020 Under construction NL Haringvliet 12 FCR* 100 2020 Under construction Total >7 GW

FCR - Frequency Containment Reserve to maintain the network frequency (EU)

59 Overview of regulatory regimes

Policy Founding year/ Status / Country Overview Time period Name Eligible technology

• A settlement price is guaranteed for offshore power provider. The support is based on the difference between agreed and Contracts for Founding year: - • Maximum of 20 years (after the market price Difference Status: In force wind farm has been connected to • If market price is lower than the agreed price, the project owner receives the support. If the market price is higher than the (CfD) Eligible technology: the grid) agreed price, the profit is divided between the project owner and the government Feed-in Founding year: 2009 • The eligible producer receives premium from the TSO Energinet.dk equivalent to the difference between the spot market • Depends on the type of technology premium Status: In force price and the fixed support income and date of commissioning tariffs (FIT) Eligible technology: • A Contract for Difference (CfD) is a private law contract between a RES-E generator and the CfD Counterparty – Low Contracts for Founding year: 2014 Carbon Contracts Company (LCCC) • CfD contracts are awarded for a Difference Status: In force • The CfD is based on a difference between the market price and an agreed “strike price” period of 15 years (CfD) Eligible technology: • If Strike price > market price: Then CfD counterparty must pay the difference between to the two to RE generator • If Strike price < market price: Then RE generator must pay the difference to the CfD counterparty • Under the Renewable obligation scheme, all the electricity suppliers in the UK have to source an increasing proportion of • ROC is issued for a period of 20 Founding year: 2002 renewable energy. They can also buy Renewable Obligation Certificates from a renewable energy producer to meet the years ROC scheme Status: In force obligation • RO scheme is closed for Eligible technology: • Renewable Obligation Certificates are issued to renewable energy producers for every MWh of renewable electricity generating capacity after 31st produced March 2017 • Provides a feed-in-premium subsidy that covers the difference between wholesale market prices of electricity and the cost of • The premium is paid for a period of Founding year: 2011 electricity from renewable sources up to 15 years MEP*/ SDE+ Status: In force • The budget is based on an auction system, where the lowest bidder receives the premium • The existing SDE+ scheme will be Eligible technology: • 2020 SDE+ overall budget: €4 millions expanded to SDE++ in 2020 • Several models deployed over the years. Prior to 2017, FIT system. This has now been replaced with a tendering process Founding year: - (prices set by competitive auctions) where projects receive contracts to sell the produced electricity at the bid price • Market premium is paid for a EEG Status: In force • Bids are based on floating market premium period of 20 years Eligible technology: • Market Premium: reference value of the respective renewable energy plant minus its technology-specific market value • Aims to add 18TWh by 2030 • The demand for certificates is regulated by a quota system, which is fixed in proportion to total electricity use (energy The • Sweden officially plans to continue Founding year: 2003 intensive industry is exempted) Electricity the green certificate subsidy Status: In force • The electricity producer receives a certificate for each MWh from renewable sources and sell it to electricity consumers in Certificate scheme until 2030, and is also Eligible technology: open market System considering to phase out onshore • Sweden and Norway have shared common electricity certificates since 2012 by 2021

*Older version of the SDE+ scheme 60 Heat Heat One of Europe’s leading players in district heating

Overview Highlights Key data • One of Europe’s leading players in district heating in large metropolitan areas 5,500 km heat grids in operation FY FY 20191 2018 • Solid, semi-regulated, revenue streams 8.9 GW heat capacity • Attractive growth prospects supported by Net sales (SEK bn) 31.4 34.0 8.6 GW electricity capacity urbanisation trend and increasing regulatory support for low carbon heating 1.9 million heat related end customers External net sales (SEK bn) 15.9 15.8 • Strong partnerships with cities for for heat EBITDA SEK bn) 4.2 4.0 realization of their carbon reduction plans < 0.5% churn rate supported by track record of fulfilling Underlying EBIT2 (SEK bn) 0.6 0.8 previous reduction targets

• Heat generation and distribution systems Sales of heat (TWh) 17.1 18.3 are a platform to integrate other energy solutions, e.g. cooling, e-mobility, wind Electricity generation (TWh) 31.7 32.0 and solar • Heat also manages Vattenfall’s condensing power plants in continental Europe

1 District heating Hamburg consolidated in 2019 (660 MSEK Underlying EBIT, 1.1 TWh electricity generation, 2.5 TWh Heat sales) 62 2 Operating profit excluding items affecting comparability Heat Overview of markets and installed capacity

The Heat operating segment includes Vattenfall’s heating and condensing businesses. Our core business is district heating, where we have 1.9 million end customers in large District heating operations/CHP metropolitan areas like Berlin, Amsterdam and Uppsala. The condensing business consists of mainly gas-fired power plants in the Netherlands. Vattenfall recently entered the UK market Condensing plants and the first contract was signed to design, build and operate a new low carbon district heating network in London (serving 10,000 household equivalents1), to be operational from 2023. Heat cluster 2019 Condensing cluster 2019

Heat (TWh) Power (TWh) Power (TWh)

Germany 9.2 5.2 Germany 5.8

Sweden 3.0 0.2 Netherlands 18.9

Netherlands 1.7 -

Total 13.9 5.4 Total 24.8

Installed capacity by GW heat 8.9 GW 1.9 (21%) Transformation into Renewables fossil-free heat supply Fossil 7.1 (79%) by 2040+

2020

1 6,700 new homes and approximately 280,000 square metres of office, retail and 63 commercial space District heating revenue and cost structure per market Business model differs per country – in Sweden stable heat revenues account for 95% of the total

Cost split (indicative)1 Revenue split (indicative)

5% 12% 10%

44% Sold on wholesale 50% 56% 35% market with 47% merchant risk

95%

Based on long- term contracts 56% 55% 50% 44% with very low 41% churn

Sweden Netherlands Germany Sweden Netherlands Germany

Operating expenses incl. grid infrastructure CO2 costs Heat related reveneus Power (& other revenues) Subsidies Fuels

1 Excluding overhead 64 Strong political support for district heat across our markets District heating is an attractive option for cities to decarbonise their building sectors As of 2020-08-28

Market maturity1 Political support Competitiveness Concession based Price setting (heat) Typical customer contract length

Green Deal – Climate neutral Europe until 2050 Strategy for more integrated energy systems + more circular energy system, with energy efficiency at its core / Hydrogen is a priority area for a clean and circular economy

Low carbon district heating Highly competitive once plans to Mainly yes, (e.g. for Price escalation formula Young market share 30% by 2030 in mandate district heating for new build Brent Cross South > 30 years for heat metropolitan areas2 (2% today) are put in place 40 years)

Highly competitive Prolonged CHP production Low primary energy factor for new Mature + support / subsidies (until 2030) Price escalation formula houses No 10 years Transition to Green Green heat funding program by for heat Reliable and comfortable delivery of city federal ministry (EUR 1 bn) heating

Natural gas phase out boosts Competitive pricing against gas, but All proposed heat Mainly concession Mature + renewable district heating. New energy efficiency advantage cannot be solutions have to be based, a typical term 15-25 years Transition to Green subsidy schemes for leveraged with a price premium due to cheaper than pure gas- is then 30 years3 connecting existing houses Heat Act fueled boiler solutions

Mature Supportive but few special Competitive position that is being No heat price No Until further notice (already green) incentives challenged by heat pumps regulation

1 Referring to how established the technology is on the market and the future growth 3 The other type of contract is the heat delivery contract. Contracts are then building- prospects specific with a typical contract length of 10 years 65 2 District heating market share of 30% in metropolitan areas follows governmental goal to reach low carbon heat supply by 17% district heating UK wide District heating volumes set to increase significantly in Amsterdam and the UK… … with a stable trend in Berlin and Uppsala as population growth is offset by energy efficiency measures

Heat consumption (TWh) and district heating market share (%) by City, 2020 vs 2040

Berlin Amsterdam1 Uppsala2 London & Edinburgh

Assuming high 31 5.6 1.6 1.6 renovation 5.5 91 91 rates realised Government

3 target to 21 support district heating4 90% 90% 74%

34% 45% 30% 18% 2% 2020 2040 2020 2040 2020 2040 2020 2040 Dominating Gas/coal/ Power to heat/green Power to heat/green Power to fuel (district Gas/waste Biomass/waste Biomass/waste Gas waste gas/biomass/TPI gas/waste heat/waste heat) Rapid phase out of coal and totally Gas boiler phase out set to spur Mature market with dominant Dramatic growth of district heating fossil free by 2040+ dramatic increase in district heating market share of district heating expected as market share increases to 30% in 2040 Total heat demand set to decrease Stable total heat demand – Stable heat demand – population due to energy efficiency measures; population growth offset by energy growth offset by energy efficiency Stable heat demand – population district heating volumes stable with efficiency meaures measures growth offset by energy efficiency increased market share meaures

District Heat Electricity, Renewables & Other Fossil

3 1 Simplified to reflect connections in Amsterdam/Almere (= 70% of Heat Netherlands); Source: Feasibility study with City of Berlin (2019) here considering building efficiency increase of 1.5% p.a. Source for 2040: Study by Municipality of Amsterdam 4 66 2 Simplified reflecting Uppsala demand (= 42% of Heat Sweden supply) District heating market share of 30% in metropolitan areas follows governmental goal to reach low carbon heat supply by 17% district heating UK wide Distribution Distribution Leading owner and operator of electricity distribution networks in Sweden and Berlin, Germany

Overview Highlights Key data

• Largest operator of regional electricity FY 2019 FY 2018 distribution networks in Sweden and 3.3 million household and business top-3 position in local networks customers Net sales (SEK bn) 22.5 22.4 • Regulated business with stable External net sales (SEK bn) 17.9 17.8 >155,000 km of electricity grids demand Underlying EBIT1 (SEK bn) 5.0 6.3 • Enabler of the energy transition by Investments (SEK bn) 7.2 6.6 connecting renewable production to the SEK 7.2 billion in investments 2019 grid SAIDI2 (minutes/customer) • Demand set to grow – Vattenfall grids SEK 64 billion RAB Sweden 4393 187 are located in areas with population Germany 10 15 growth and strong demand for industrial SAIFI4 (number/customer) electrification Sweden 2.4 2.9 • High operational efficiency compared to industry average Germany 0.2 0.3 • Our positioning across the whole energy value chain enables us to take advantage of our networks using both demand and supply side flexibility

1 Operating profit excluding items affecting comparability 2 SAIDI: System Average Interruption Duration Index 3 SAIDI in 2019 for Sweden was driven by the storm “Alfrida” 68 4 SAIFI: System Average Interruption Frequency Index Distribution Market and business overview

In brief Market shares in Sweden Vattenfall Regulatory Asset Base 2019 • Vattenfall’s Distribution business owns (SEK bn) and operates electricity distribution 45.2 networks in Sweden and Germany (Berlin) Customers Markets Market local grids share share local • Approximately 3.3 million business and regional grid grid household customers Vattenfall 900,000 52% 16% 18.8

• A new business unit for operation and Ellevio 960,000 21% 17% ownership of new networks in the UK was E.ON 1,000,000 24% 19% established in 2017. Sweden Germany

• During 2019, Vattenfall Networks in the UK was awarded its first three contracts, Operating result (EBIT) in 2019 entailing ownership and operation of the electricity networks for industrial and commercial premises. Germany (Berlin) 22%

~SEK 5 bn

78% Sweden

69 Energy transition to spur dramatic growth in electricity demand in Sweden Electrification, growth in renewable production capacity and ageing assets call for large network investments

Electricity demand set to grow due to Installed wind capacity continues to Existing network assets are electrification and new electricity grow increasingly in need of reinvestments intensive businesses • More and more capacity will be • There was a large build out of network • Electrification of industry and transports to intermittent and decentralised assets in 1970-1990. These assets are increase total electricity demand • Wind production is set to continue the now reaching the age when they need to be reinvested in • New businesses such as data centres are growth in Sweden, mainly in the North and also likely to have a significant impact off the coast in Southern Sweden which • This is on top of the need to make new increases the need for network capacity investments in the network to • Efficiency improvements in the housing accommodate more renewable energy sector only have a small mitigating effect and electrification on total demand

Forecast – Change in electricity demand (Sweden)1 Forecast - installed wind capacity (Sweden)2 Asset age structure – Vattenfall Eldistribution3 50 100 4 10 years 20 years 30 years 40 40 years 50 years 80 3 30

60 TWh

TWh 20 BSEK 2 40 10 1 0 20 2020 2025 2030 2035 2040 2045 -10 0 0 2020 2030 2040 Housing Datacenter etc Industry Transportation 1930 1940 1950 1960 1970 1980 1990 2000 2010

1 Source: Nepp, Färdplan för fossilfri el, Aug 2019 2 Source: Svensk vindenergi, 100 procent förnybart 2040, Oct 2019 70 3 Asset base per 2020-01-01 Allowed revenue framework – Sweden and Germany

Schematic overview - Sweden Schematic overview - Germany

Controllable Non-controllable Regulatory Capital Base Controllable Non-controllable Cost of Capital costs costs OPEX OPEX ~20 % ~40 % ~40 % ~30 % ~40 % ~30 %

Efficiency Quality and Requirement Depreciation Return on capital Smart Grid Depreciation Return on capital Incentives

Allowed OPEX Compensation Allowed Capital Compensation Allowed OPEX Compensation Allowed Capital Compensation

Allowed revenue Allowed revenue before incentives - before dynamic elements +

Adjustment for over- or • Individual and general • CAPEX-true-up underbilling in • Non-controllable costs earlier periods efficiency requirements • Quality of supply • Customer Price Index • Regulatory account • Price for net-losses • Regulatory account

Allowed revenue Allowed revenue

71 Smart solutions for optimising the energy system Addressing the shortage of network capacity in the short- and medium term

For many years, large-scale, dispatchable Schematic overview of flexibility in the modern energy system production and predictable demand Flexibility need Market for flexibility Flexible resource Opportunity behind the meter patterns have been the basis for • Day-ahead (hours) controlling the power system. However, • Intra-day (15 min-1h) two major trends in the energy transition System level Hydro Wind Local optimization with e.g., • Frequency (seconds) are challenging this: Balancing variability continuously battery storage to capture high- • Capacity reserve (seasons) and managing larger faults price hours in the market • Disturbance 1. Demand side: Further electrification, driven by urbanisation and • Regional grid capacity decarbonisation of the heating, • Ex: CoordiNet pilot transport and industrial sectors, is Grids Residential loads Local optimization with e.g., heat Support congested grids and storage to avoid capacity fees or resulting in new, large and power limit bottlenecks optimise usage intensive loads 2. Supply side: More intermittent Markets not yet developed renewable energy is putting strain on Sample Vattenfall projects the grid, creating congestion and 1. Demand side flexibility - Coordinet increasing the need to manage fluctuations in power generation In collaboration with E.ON and the Swedish TSO, Svenska Kraftnät, Vattenfall is piloting a marketplace for (sometimes on short notice) demand-side flexibility. Artificial intelligence is used to forecast the capacity of the electricity network and analyse electricity consumption in real time, to help alleviate network capacity shortages at a regional level Increasing the system flexibility is with pilots in development in four Swedish regions therefore becoming more and more valuable. However, flexibility is only part of 2. Supply side flexibility - Power-to-Heat plant in Berlin the solution and it is necessary to invest in Vattenfall commissioned a 120 MWheat power-to-heat plant that can take local excess renewable electricity – expanding the network as well as which would otherwise be shut off to maintain frequency – and use it to provide district heating for more than developing the existing network in order to 30,000 Berlin residents fully enable the energy transition

For more info: See page 54-55 in Vattenfall’s Annual- and Sustainability Report 2019 72 Financial performance Vattenfall H1 Results 2020 Financial highlights

Key data Key developments

SEK bn H1 2020 H1 2019 • Net sales decreased by SEK 4.8 bn to SEK 79.4 bn Net Sales 79.4 84.2 due to lower spot prices and lower volumes in the EBITDA 25.2 20.1 Nordics and the Netherlands, district heating Hamburg divestment and closure of Hemweg 8 Underlying operating profit (EBIT) 13.0 13.3 • Underlying EBIT decreased by SEK 0.3 bn mainly due EBIT 5.3 11.0 to lower achieved prices in the Nordics, lower nuclear generation and lower contribution from Heat. Offset by Profit for the period -1.6 7.7 strong sales in Germany and the Netherlands and Funds from Operations (FFO) 16.7 15.8 lower costs in Distribution (following Storm Alfrida in 2019) Cash flow operating activities 7.4 -1.9 • Profit for the period decreased to SEK -1.6 bn, mainly Net debt 71.6 72.5 as a result of write-downs in the operating segments Heat (SEK 9.1 bn) and Wind (SEK 1.5 bn) Adjusted net debt 140.3 137.2 • ROCE was 6.1% mainly due to impairments Adjusted net debt/EBITDA1 (times) 3.0 3.7 • FFO/Adjusted net debt increased to 25.5%, mainly as Financial targets a result of higher FFO due to higher EBITDA. Main drivers were positive effects from hedging activities ROCE1 (≥8%) 6.1 7.1 and lower costs in operating segment Distribution FFO/adjusted net debt1 (22-27%) 25.5 19.2

1 Last 12-month values 74 Development of underlying EBIT H1 2020 Increase from C&S and Distribution offset by lower earnings in Power Generation and Heat

Change in H1 2020 vs. H1 2019 Breakdown per operating segment Highlights SEK bn SEK bn • Customers & Solutions: strong contribution 13.3 Underlying EBIT H1 2019 13.3 13.0 from sales in Germany and the Customers & Solutions 0.5 Netherlands. Lower depreciation in the 1.4 Netherlands Customers & Solutions 0.9 • Power Generation: lower achieved prices and lower nuclear generation, partly Power Generation -1.5 Power Generation 8.4 countered by higher realised earnings from 6.9 trading Wind 0.2 • Wind: additional capacity (Horns Rev 3) countered by lower availability and lower Heat -0.5 achieved prices

Wind 1.9 2.0 • Heat: effects from sale of district heating Distribution 0.7 operations in Hamburg and the closure of 0.6 Heat 1.1 Hemweg 8. Unfavorable clean dark and clean spark spreads also contributed to Net other effects 0.0 2.9 Distribution 2.3 lower electricity production. • Distribution: lower operating costs following Underling EBIT H1 2020 13.0 Other -0.8 -0.8 H1 2019 H1 2020 the Storm Alfrida in Q1 2019

75 Cash flow development H1 2020 Negative working capital development mainly related to CO2 emission allowances

SEK bn 25.2 -1.4 -2.1 -0.2 -4.9

16.7 -9.3

7.4 -5.6

1.8 -4.6 -2.3 0.5

EBITDA Tax paid Interest Capital Other1 FFO Change Cash Maintenance Free Growth Divestments, Cash flow paid/received, gains/ in WC flow from and cash flow investments net before net losses, net operating replacement financing activities investments activities

Main effects

• Change in working capital mainly driven by changes related to CO2 emission allowances (SEK -4.5 bn), net change in margin calls for commodity hedging activities (SEK -1.0 bn), seasonality in net change in operating receivables and liabilities in the Customers & Solutions and Heat operating segments (SEK -0.9 bn) and increased inventory (SEK -0.9 bn) • Growth investments mainly related to wind power

1 ”Other” includes non-cash items included in EBITDA, mainly changes in fair value of 76 commodity derivatives in H1 2020 Hedging, debt and funding

H1 2020 numbers Price hedging

Vattenfall continuously hedges its future electricity generation through sales in the forward and futures markets. Spot prices therefore have only a limited impact on Vattenfall’s earnings in the near term

Estimated Nordic1 hedge ratio (%) and indicative prices Achieved prices2 - Nordic portfolio

65% YTD 2020 YTD 2019 Q2 2020 Q2 2019 FY 2019 57% 28 32 30 28 32

Sensitivity analysis – Continental3 portfolio

29% Market +/- 10% price impact on future profit quoted before tax, MSEK4 Observed yearly 2021 2022 2023 volatility Electricity +/- 951 +/- 1,261 +/- 1,436 17% - 23%

2020 2021 2022 Coal -/+ 77 -/+ 93 -/+ 122 16% - 19%

Average Gas -/+ 332 -/+ 587 -/+ 690 17% - 23% indicative Nordic 33 30 31 hedge prices in CO2 -/+ 278 -/+ 358 -/+ 412 44% - 46% EUR/MWh

1 Nordic: SE, DK, NO, FI 3 Continental: DE, NL, UK. 2 Achieved prices from the spot market and hedges. Includes Nordic (SE, DK, FI) hydro, 4 The denotation +/- entails that a higher price affects operating profit favorably, and -/+ vice 78 nuclear and wind power generation versa Debt development

SEK bn Gross debt Net debt Adjusted net debt

160 148.3 140.3 134.4 137.2 140 130.9 132.0 128.9 127.1 124.1 124.7 123.3 124.4 125.2 125.3 113.3 114.8 120 112.0 109.3 112.3 113.8 99.6 101.7 96.6 98.6 96.7 96.0 97.5 97.6 100 91.9 93.8 93.8 87.2 88.3 84.2 81.6 80 72.5 72.5 71.6 67.2 63.7 64.4 64.3 58.0 56.8 59.3 57.8 59.6 60 54.7 50.7 47.7 42.4 40

20

0 30.06.16 30.09.16 31.12.16 31.03.17 30.06.17 30.09.17 31.12.17 31.03.18 30.06.18 30.09.18 31.12.18 31.03.19 30.06.19 30.09.19 31.12.19 31.03.20 30.06.20 Net debt increased by SEK 7.3 bn compared with the level at 31 December 2019. Adjusted net debt increased to SEK 140.3 bn, SEK 8.3 bn higher compared with the level at 31 December 2019. For the calculation of adjusted net debt, see slide 23.

79 Reported and adjusted net debt

Reported net debt 30 Jun. 31 Dec. Adjusted net debt 30 Jun. 31 Dec. (SEK bn) 2020 2019 (SEK bn) 2020 2019

Hybrid capital -20.2 -20.2 Total interest-bearing liabilities -114.8 -97.6

Bond issues and liabilities to credit institutions -51.9 -38.8 50% of Hybrid capital 10.1 10.1

Commercial papers and Repos -20.2 -17.2 Present value of pension obligations -43.2 -44.0

Liabilities to associated companies -0,7 -0,7 Wind & other environmental provisions -8.8 -8.6

Liabilities to minority shareholders -11.0 -10.6 Provisions for nuclear power (net) -37.9 -35.5

Lease liabilities -4.4 -4.6 Margin calls received for funding activities 4.8 3.7

Other liabilities, incl. margin calls for funding activities -6.3 -5.2 Liabilities to minority owners due to consortium 11.0 10.6 agreements Total interest-bearing liabilities -114.8 -97.6 = Adjusted gross debt -178.7 -161.3 Reported cash, cash equivalents & short-term 42.6 33.2 investments Reported cash, cash equivalents 42.6 33.2 & short-term investments Loans to minority owners of foreign subsidiaries 0.5 0.2 Unavailable liquidity -4.3 -3.9 Net debt -71.6 -64.3 = Adjusted cash, cash equivalents & short-term 38.4 29.3 investments

= Adjusted net debt -140.3 -132.0

80 Breakdown of gross debt

Total debt: SEK 114.8 bn (EUR 10.9 bn) External market debt: SEK 103.1 bn (EUR 9.8 bn) Debt issuing programmes Size (EUR bn) Utilization (EUR bn)

EMTN 40% EUR 10bn Euro MTN 10.0 4.1

EUR 4bn Euro CP 4.0 1.7 Hybrid capital 18% Total 14.0 5.8

Commercial paper / Repo 18%

Loans from minority shareholders 10%

Bank loans 5% • All public debt is issued by Vattenfall AB Lease 4% • The main part of debt portfolio has no currency exposure that has an impact on the income statement. Debt in foreign Margin calls for funding activities 4% currency is either swapped to SEK or booked as hedge against net foreign investments. Other liabilities 1% • No structural subordination

Loans from associated companies 1%

1 EMTN= Euro Medium Term Notes 81 Debt maturity profile1

24.0 SEK bn 30 Jun. 31 Dec. 2020 2019

Duration (years) 4.3 4.7

17.5 Average time to maturity (years) 5.5 6.8

Average interest rate (%) 3.4 4.0

Net debt (SEK bn) 71.6 64.3

Available group liquidity (MSEK) 38.4 29.3 10.5 Undrawn committed credit facilities 24.0 21.4 8.6 (MSEK)

6.0 5.3 5.3 5.3 3.9 4.1 2.9* 3.2 Cumulative maturities excl. undrawn back-up facilities 1.1 0.5 0.3 2020- 2023- From 2022 2025 2026 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 Debt incl. hybrid capital 29.6 20.1 24.8

Hybrid capital (first call date) Debt (excl. hybrid cap) Undrawn back-up facilities % of total 40% 27% 33%

* Short term debt are excluded (Repo, ECP and SCP) (20,0) 1 Commercial paper (ECP) Loans from associated companies, minority owners, margin calls received (CSA) and valuation at fair value are excluded and currency derivatives for hedging debt in foreign currency are included 82 Liquidity position

Facility size, Group liquidity SEK bn Committed credit facilities EUR bn SEK bn Cash and cash equivalents 19.8 RCF (maturity Dec 2021) 2.0 21.0 Short term investments 22.8 RCF (maturity Jul 2021) 3.0

Reported cash, cash equivalents & short 42.6 Total undrawn 24.0 term investments Debt maturities2 SEK bn Unavailable liquidity1 -4.3 Within 90 days 0.4 Available liquidity 38.4 Within 180 days 2.9

1 German nuclear ”Solidarvereinbarung” 1.0 SEK bn, Margin calls paid (CSA) 2.4 SEK bn, Insurance “Provisions for claims outstanding” 0.8 SEK bn 83 2 Excluding loans from minority owners and associated companies Nuclear provisions

Reactor Net capacity Start (year) Vattenfall share Vattenfall provisions, SEK Vattenfall provisions, Sw nuclear waste fund (MW) (%) bn (IFRS accounting) SEK bn (pro rata) SEK bn (Vattenfall pro rata share)

Ringhals 1 879 1976 70.4 Ringhals 2 809 1975 70.4 Ringhals 3 1,070 1981 70.4 Ringhals 4 942 1983 70.4 Total Ringhals: 35.5 Total Ringhals: 35.51 Forsmark 1 984 1980 66.0 Forsmark 2 1,120 1981 66.0 Forsmark 3 1,170 1985 66.0 Total Forsmark: 31.3 Total Forsmark: 20.6 Total Sweden 6,974 - 69.62 57.42 38.93 Brunsbüttel 771 1977 66.7 12.0 8.0 Brokdorf 1,410 1986 20.0 0 3.5 Krümmel 1,346 1984 50.0 7.6 7.6 Stade4 640 1972 33.3 0 0.9 Total Germany 4,167 - - 19.6 20.0 Total SE & DE 11,141 89.2 77.4

1 Vattenfall is 100% responsible for Ringhals decommissioning, while owning only 70.4% 3 Vattenfall’s share of the Nuclear Waste Fund. IFRS consolidated value is SEK 46.2 bn. 2 Total provisions in Sweden (IFRS accounting) include provisions of SEK 0.5 bn (pro rata SEK 0.3 bn considering share in 4 Stade is being dismantled Studsviksfonden) related to Ågesta, and SEK 2.3 bn (pro rata SEK 1.0 bn considering share in Studsviksfonden) related to SVAFO

84 Investor Relations contacts

Johan Sahlqvist Tobias Sjöberg Emmi Östlund

Head of Investor Relations Investor Relations Officer Investor Relations Officer

+46 8 739 72 51 +46 8 739 60 63 +46 8 739 69 24

[email protected] [email protected] [email protected]

Investor webpage / Financial reports & presentations

Financial calendar

27 October 2020 Interim report January-September 2020 4 February 2021 Year-end report for 2020 29 March 2021 Annual and Sustainability report 2020 29 April 2021 Interim report January-March 2021 20 July 2021 Interim report January-June 2021 85